Average Car Loan Length in 2025: What You Need To Know
Written by
Cynthia Measom
Edited by
Elizabeth Constantineau, CFHC™
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The average car loan length is now about 69 months, per the latest Experian auto finance report — longer than last year and a sign that many buyers are spreading out their payments. But whether you choose 48, 60, 72 or even 84 months can seriously affect your monthly bill and long-term costs.
What the Average Car Loan Looks Like Today
The average car loan for new vehicles now lasts around 69 months, while used-car loans average 67 months. Borrowers with excellent credit finance new cars for shorter periods — around 64 months — while those with the lowest credit scores average 63 months on used vehicles.
Here’s a look at how the average annual percentage rate (APR), loan term and credit score vary between new and used vehicles:
| Category | New Cars | Used Cars |
|---|---|---|
| APR | 6.73% | 11.87% |
| Loan term | 68.63 months | 67.22 months |
| Credit score | 756 | 684 |
Common Car Loan Terms Explained
- Loan term: How long you have to pay back what you borrow.
- Principal: The amount you borrow.
- Interest: The cost of borrowing money, expressed as a percentage.
- Monthly payment amount: How much you’ll pay each month, including principal plus interest.
How Loan Length Affects Cost
While a longer auto loan term results in lower, more manageable payments, the amount of interest the borrower pays will be much higher than that of a shorter-term loan.
Here’s a general breakdown of how an auto loan might look:
| Loan Term | Monthly Payment | Interest Paid | Best For |
|---|---|---|---|
| 36 months | Highest | Lowest | People who want to pay off their loan quickly and save on interest |
| 48 months | High | Lower | Buyers looking for a balance between cost and savings |
| 60 months | Moderate | Moderate | Most common loan term for affordability |
| 72 months | Lower | Higher | Buyers wanting lower monthly payments |
| 84 months | Lowest | Highest | Those prioritizing low payments over total cost |
Auto Loan Example
Here’s an example of an auto loan in action:
| Loan Term | Interest Rate | Monthly Payment | Total Loan Interest |
|---|---|---|---|
| 36 months | 6.94% | $616.99 | $2,211.76 |
| 48 months | 6.94% | $478.37 | $2,961.68 |
| 60 months | 6.94% | $395.46 | $3,727.48 |
| 72 months | 6.94% | $340.40 | $4,509.10 |
| 84 months | 6.94% | $301.27 | $5,306.46 |
Short-Term vs. Long-Term Car Loans
Knowing the average length of a car loan is one thing. What’s more important is knowing the key factors of choosing a short-term vs. a long-term loan. Here are the big ones:
| Feature | Short-Term Car Loan | Long-Term Car Loan |
|---|---|---|
| Monthly payment | Higher monthly payments | Lower monthly payments |
| Total interest paid | Lower overall interest cost | Higher overall interest cost |
| Loan interest rates | Typically lower | Typically higher |
| Equity in vehicle | Builds equity faster | Slower equity growth, higher risk of negative equity |
| Loan approval requirements | Stricter, requires higher income | Easier approval with lower monthly obligations |
| Vehicle age considerations | Ideal for new or lightly used cars | May be used for older vehicles but with higher rates |
| Best for | Those who can afford higher payments and want to save on interest | Those needing lower monthly payments and more flexibility |
Certain things, like eligibility criteria, depend on the lender. Some lenders might view a longer-term loan as riskier and have stricter requirements. Interest rates for used car loans may also be higher.
Pros and Cons of Shorter Car Loan Terms
Here are the main benefits and drawbacks of getting a shorter car loan term — one that’s between three and four years:
| Pros | Cons |
|---|---|
| Lower interest costs over the life of the loan | Higher monthly payments, making budgeting tougher |
| Faster loan payoff, meaning ownership sooner | May require a larger down payment to afford them |
| Less risk of being underwater — owing more than the car’s value |
Pros and Cons of Longer Car Loan Terms
The average car loan length is 68 months, which is considered a longer loan term. Here are the main advantages and drawbacks of these loans:
| Pros | Cons |
|---|---|
| Lower monthly payments, making expensive cars more accessible | Higher total interest costs |
| More flexibility for those with other financial obligations | Greater risk of negative equity as the car depreciates |
| Higher chance of needing repairs while still paying the loan |
Good To Know
Ultimately, longer terms mean paying more for the vehicle. For example, a $30,000 auto loan with a 6% APR and a 36-month term would cost about $32,856 in total. That same loan with an 84-month term would cost $36,814.
Factors To Consider When Choosing a Loan Term
Here are some tips on choosing the right auto loan term for you:
- Consider your monthly budget and total loan cost: Calculate how much you’re willing to spend on a car, and make sure you have enough money coming in to cover the new loan.
- Think about how long you plan to keep the car: If it’s not for a long time, or if you intend to trade it in, a longer term could be better. But if you want to pay it off sooner and keep the vehicle for the long haul, a shorter loan could save you money.
- Compare lenders: Different lenders charge different rates. Some may have additional fees or only offer specific terms. Make a shortlist of your preferred lenders and get prequalified to see what you could get.
- Check interest rates: Rates can vary based on loan term, credit score, debt-to-income ratio and lender. Even half a percentage point could make the difference of hundreds or thousands of dollars over the life of the loan.
- Use a car loan calculator: Use an online calculator and run the numbers to see which auto loan term suits your needs and budget. You may want to include sales tax, registration and other fees.
- Consider your other debts: If you already have credit cards and loans, weigh your options before taking on another debt. If you can reliably pay the new loan back and it won’t hurt your credit score, now might be the time to take out a loan. Otherwise, you may want to pay off existing debts first to free up cash.
Refinancing Your Auto Loan?
- A longer term lowers your monthly payment but keeps you in debt longer.
- A shorter term raises your payment but saves you money on interest — and helps you pay off the car faster.
Final Take: Tips for Choosing the Best Auto Loan Term
To lock in a loan term that protects your budget — and saves you money — keep these strategies in mind:
- Improve your credit score before applying.
- Make a larger down payment to reduce the loan amount.
- Get preapproved so you know the terms you qualify for.
- Compare multiple lenders for the best rate.
- Choose the shortest loan term your budget can comfortably handle.
FAQ
- What is the most common car loan length?
- It's difficult to pinpoint the most common car loan length. However, the average loan term for new cars is around 69 months.
- Is it better to get a shorter or longer car loan?
- If possible, it's better to get a shorter loan because, although your payments will be higher, you'll pay less overall in interest.
- What's the maximum loan term most lenders offer?
- Although not very common, some lenders offer 84-month car loans. The most common longer term is 72 months.
- Can I refinance to change my loan length later?
- Yes, it's possible to refinance to change your car loan length. The smartest decision is to refinance to a shorter-term loan because you'll pay it off faster and pay less interest.
Angela Mae Watson contributed to the reporting for this article.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
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- CFPB. "CFPB Report Finds Sharp Increase In Riskier Longer-Term Auto Loans."
- FTC. "Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth."
- LendingTree. 2025. "Average Car Payment and Auto Loan Statistics: 2025."
- Experian. 2025. "Average Car Payment in 2025."
- Experian. 2025. "How to Get the Best Auto Loan Rate."
